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How to Transition From the Military to Civilian Life Without Breaking Your Budget

Jan. 14, 2015
Personal Finance
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When Glenda Oakley of San Antonio, Texas, received her first civilian paycheck after serving as an officer in the U.S. Army for five years, she was surprised how much went to taxes and insurance.

“When I got my first paycheck, I kind of got a pay cut, because I didn’t know how to calculate those benefits we received,” says the former captain, who voluntarily left the military in 2009 after being deployed to Iraq during the troop surge.

As the military downsizes, thousands of officers and enlisted personnel are now searching for jobs, navigating new living costs, figuring out where to relocate and running into similar surprises. Transitioning from the military world to the civilian one isn’t just potentially stressful and upsetting — it can also be expensive.

“In the military, a lot of things are already in place for you,” Oakley says. In civilian life, she notes, you have to figure out a lot of the twists and turns on your own.

To minimize the financial impact, follow these tips:

Start your job hunt as early as possible.

It can be hard to set aside time to look for civilian jobs. But the sooner you get a start on this, the easier it will be to find a position that fits your passions and salary expectations.

Each branch of the military has its own transition program, which can help you explore different career paths and job hunt strategies. You’ll have to see a pre-separation counselor at least 90 days before leaving the service to discuss resources and benefits, but consider meeting sooner to get a head start on planning.

Start a LinkedIn page and reconnect with people in your network. You might be able to find a position that suits your skills and experience simply by talking to someone who’s already in your network.

Budget for insurance.

When you’re an active duty service member, your health and dental insurance are provided through TRICARE at no cost, and life insurance is heavily subsidized. In the civilian workforce, that level of benefits is hard to come by. Most often, you’ll find yourself paying monthly premiums for these types of plans, and depending on what kind of coverage you select, that could take a lot out of your paycheck.

To find the best health plan for you, use NerdWallet’s health insurance guide. If you have dependents, consider purchasing a term life insurance policy. Reduce your other fixed expenses to make sure you can buy this coverage.

Relocate to a city with a high employment rate and affordable cost of living.

If you have an honorable discharge and are leaving the military involuntarily, you can get reimbursed for moving back to your home of record or anywhere in the U.S. If you’re exiting voluntarily, you can move to your home of record or a place of equal or lesser distance.

Consider using this benefit to move to an area with a low unemployment rate and an affordable cost of living. If you’re buying a house, remember that you can use your VA benefits to qualify for a low-interest loan. Just use your DD-214 form to apply for a Certificate of Eligibility and you’ll be able to take advantage of those benefits.

Explore going back to school.

If you qualify for GI Bill benefits, consider going back to college to get your diploma. Earning a degree can give you more time to network with people in your field of interest and make you a more competitive candidate for certain positions.

Don’t write off a college you’re interested in just because its tuition exceeds your GI Bill benefits. If the school participates in the Yellow Ribbon Program, you might be able to qualify for additional financial aid to cover those costs. Just keep in mind this aid program is first come, first served. If you do qualify for Yellow Ribbon benefits, they might not cover all your expenses.

Know your resources.

Don’t be afraid to ask for help. Go to your installation transition office to ask questions about the next steps you need to take. Ask previous supervisors if they can write recommendations for you. Chances are, you know someone in your unit who’s been through the whole military-civilian transition. Give him or her a call and ask for advice and encouragement.

The secret, Oakley says, is persistence. “Stay positive. Keep trying,” she urges.

Image via iStock.